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Karnivesh

Simplifying finance.... • 1d

When I first heard the term negative working capital, it sounded like a problem. Then I saw how some businesses actually use it. In these models, customers pay first. Products move quickly. Suppliers are paid later. Cash enters the system before expenses leave it, making daily operations surprisingly comfortable. You see this in retail, FMCG, and even auto companies. Payments are collected instantly, inventory turns fast, and supplier terms do the heavy lifting. The business isn’t chasing cash. Cash is already there. But it only works when driven by strong operations. Fast turnover, trusted brands, and healthy supplier relationships. When negative working capital comes from delayed payments or slowing sales, it’s a warning sign. Understanding this difference changed how I read balance sheets. Sometimes, what looks negative on paper is actually a quiet strength. 👉 Refer to the attached link for a deeper breakdown and examples.

https://www.karnivesh.com/post/negative-working-capital-models-explained-why-some-indian-companies-need-less-cash-quick-eads

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